The Consumer Relations Consortium (CRC) has asked the California Department of Financial Protection and Innovation (DFPI) to remove language from the latest iteration of its complaints and inquiries to avoid creating personal liability for employees of covered entities. The CRC also suggested that, in order to better serve consumers, DFPI should allow electronic disclosures without an opt-in.
The CRCs comments prepared by Legal Advisory Board members John Bedard of Bedard Law Group and Jessica Klander of asked Bassford Remele DFPI amends its proposal as follows:
Eliminate the possibility of personal liability
The DFPIs March 23, 2023, Update to its Proposed Complaints and Inquiries Regulation (Proposed rule) includes a requirement that a covered entity designate an official who is “ultimately responsible” for the effective operation and management of the appeals process.
The phrase “ultimately responsible” creates a significant inconsistency.
If left as is, it can be interpreted as assigning personal responsibility to a designated employee who supervises the complaint process, as ptcontravenes the general application of the proposed rule. Further no other industries hold officials personally responsible for monitoring and implementing grievance processes and procedures. To remedy this inconsistency, the CRC proposed:
- Update the definition of “officer” to clarify that an “officer” has the authority and responsibility for the effective operation and management of the covered entity’s grievance process; and
- Remove the phrase “ultimately responsible.”
With these changes, DFPI can achieve its goal of requiring a covered entity to have an individual oversee the grievance process without potentially exposing an individual employee to personal liability.
Allow annual notices to be sent electronically without opt-in
The proposed rule creates additional hurdles for consumers by only allowing covered entities to send annual information electronically if the consumer has previously agreed to receive electronic correspondence. To better serve consumers who generally prefer electronic communications, and because of the costs and difficulties associated with traditional mail, the CRC has asked DFPI to reverse its opt-in requirement and allow covered entities to send notices either in writing or electronically.
The CRC’s full commentary can be found here.
About the Consumer Relations Consortium
The Consumer Relations Consortium (CRC) is an organization of more than 60 national companies representing the diverse debt collection ecosystem, including creditors, data/technology providers, and compliance-oriented debt collection companies that are major market participants. Established in 2013, the CRC evolves the debt collection paradigm by engaging stakeholders—including consumer advocates, federal and state regulators, academic and industry thought leaders, creditors and debt collectors—and challenges them to move beyond talking points and focus on creating real-world solutions , that actually improves the consumer experience. CRC’s collaborative and honest approach is unique in the market. The CRC is administered by The iA Institute.
About the legal advice
The Legal Advisory Board (LAB) is an exclusive membership group of outside counsel with expertise in the debtor industry, each of whom has given their time and resources to support the CRC’s mission. LAB is limited to ten law firms and consists of fourteen lawyers in total. The 2023 members can be found here. Throughout the year, the LAB serves as a legal resource for the CRC membership and helps fulfill the mission of promoting forward-thinking approaches to the issues raised by regulatory policy and technological innovation in the debtor industry.